Apple Reveals Movie & TV Sales in Billions - is This Really a Hobby?

During Apple's Q3, 2013 earnings report, the companys CFO, Peter Oppenheimer, provided additional details of its Apple TV movie and TV episode sales. The numbers are, these days, in the billions of dollars, and are nothing to sneeze at. They have to be taken seriously even as rumors swirl regarding a new Apple HDTV initiative.

In Peter Oppenheimer's opening remarks, he cited the following numbers for iTunes. 60,000 movies available and 230,000 TV episodes available. 60,000 movie titles is a considerable increase from the 8,000 titles (2,000 in HD) back in 2010.

Mr. Oppenheimer went on to note that Apple customers, in the quarter, purchased 350,000 movies per day and 800,000 TV episodes per day. That's compared to about 50,000 movies per day in 2008.

Assuming US$3.99 per movie on the average (assuming most are rentals) and $2.99 for HD TV episodes, that comes to at least $340 million revenue per quarter. That's compared to, and a considerable fraction of, Netflix's quarterly revenue of about US$ 1.07 billion.

Finally, Mr. Oppenheimer revealed that Apple customers have downloaded about 1 billion TV episodes and 390 million movies to date.

While Hollywood may be doling out the rights to many different companies, such as Apple, Amazon Prime, Hulu and Netflix, so that no one company gains control or leverage, it's important to note that Apple is generating well over a billion dollars per year in revenue from just these two sources. movies and TV episodes. Any consideration of how Apple may or may not move into a different or augmented HDTV experience and product will have to take this, extraordinary "hobby" revenue, the envy of any other company, into consideration.

The recent movement towards allowing other services such as Hulu and Netflix on Apple TV as well as services already subscribed to on cable or satellite, like HBO (Go), suggests that Apple may now see the delivery of content as simply a run-of-the-mill feature, not to be disrupted, but perhaps enhanced in their rumored Apple HDTV project. Just as with the iPad and AirPlay, it may be all about the hardware, options, services, apps and the experience. The video content, as always, is left to others.

Apple will likely add a third connection between the Apple TV and their ecosystem. Apps will be coming to TV. No competitor is in a position to match them as a whole system that works in so many places seamlessly. At some point the “hobby” label just doesn’t apply.

$3.99 is on the low end of what Apple charges for movie rentals. I’m not sure if they actually broke out the rental/sales split for those 350,000 movie downloads per day, but the sale price of a movie on iTunes is more like $12.99 on average. I’d guess that the revenue per quarter is much more than $340 million.

anovelli, yes gaming has been a logical progression expected for some time. The Apple TV will need hardware changes to make that happen. It will also need iOS changes. But my thoughts were for other types of apps. iWorks in the cloud comes to mind as a beginning. Hopefully they will finally get some consumer friendly deal in place with a content provider perhaps in the form of a TWC app. The potential for apps designed specifically for Apple TV boggles the mind and iTunes revenue could expand greatly along with a new hardware business.